From Washington to Brussels to Delhi: Biofuels Under Pressure

The market is firmly in reactionary mode as Washington weighs the politically sensitive question of reallocating small refinery exemptions. A draft EPA proposal is now under White House review, and while the intent is to redistribute exempted gallons back into the Renewable Fuel Standard, the volumes are large enough that lawsuits appear inevitable. D4 RINs have not shown any real ignition on the news, with the December ’25 contract last at $1.055 (–1.17% on the day), while December ’26 sits higher at $1.115.

In the ARAG window, activity was steady on 3 September as the market rolled forward into October delivery. RME averaged $1,440.22/mt, FAME 0 stood at $1,392.89/mt, and UCOME at $1,516.14/mt. Premiums remained firm, with RME posting +733 over gasoil and UCOME showing a wide +123.25 over FAME. Trading was active with Totsa, Essar, and Saipol featured on the tape, and the transition to Q4 delivery highlights that seasonal dynamics are beginning to shape flows and spreads.

Gross margins in ARAG continue to look challenged when measured against feedstocks, especially once adjusted for FX. Using today’s offers and the strong euro at 1.1666, RME shows a margin of only ~+$180/mt against Dutch rapeseed oil (€1,080/t), while UCOME nets around +$220–275/mt versus UCO (€1,065–1,110/t ex-works/DDP ARA). FAME 0 margins are steadier at ~+$308/mt against Dutch soyoil ($1,085/t). It is worth noting that biodiesel flat prices and premiums are quoted in USD, so euro strength inflates feedstock costs when converted, giving the impression of thinner margins even if dollar-denominated values are unchanged.

Euro Fx

In the US, screen biodiesel crush remains deeply negative despite modest improvement, ranging from –$0.41 to –$0.51/gal depending on the heating oil leg. Soybean oil futures softened further, with Dutch origin soyoil offered at $1,085/t FOB, while oil share holds at around 47%. The BOGO spread dropped back to +$423.87, down more than $18 on the day, underscoring persistent weakness in US oilseed values even as energy prices trade firm. For producers, the imbalance between feedstock costs and biodiesel values remains a key constraint.

Globally, structural pressures are reshaping investment. Russian diesel exports fell in August, east-west spreads are holding firm, and ICE gasoil continues to lend support in Europe. But Shell’s decision to abandon its Netherlands biofuels facility is a telling signal: in our view, it reflects growing concerns over SAF overcapacity, exacerbated by the ability to coprocess renewable feedstocks in existing refineries, which undermines greenfield HVO/SAF economics. The move has already sparked lobbying by EU refiners for Brussels to revisit its stance on Chinese SAF imports, given the competitive distortion they create. Meanwhile, India used its Global Biofuels Alliance platform to underscore aviation’s role in decarbonisation, setting out a SAF blending mandate of 1% by 2027, 2% by 2028, and 5% by 2030 in line with CORSIA. The seasonal roll into October delivery will keep premiums supported in Europe, but margin compression, coprocessing competition, and policy responses are now at the center of the outlook.